    [Public Papers of the Presidents of the United States: George W. Bush (2004, Book III)]
    [December 16, 2004]
    [Pages 3092-3109]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks in a Panel Discussion on Financial Challenges for Today and
    Tomorrow at the White House Conference on the Economy
    December 16, 2004

        The President. Thank you all. Yes, Joshua. Thank you all for coming. Last night I had the honor of
    attending a reception for those who have participated in these series of
    panels, and I had a chance to thank them. I said something I think is

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    true, which is, citizens can actually affect policy in Washington. In
    other words, I think people who end up writing laws listen to the voices
    of the people who--and can be affected by citizen participation. So I
    want to thank you all for doing this.
        We're talking about significant issues over the course of these
    couple of days. We'll talk about an important issue today, which is how
    do we keep the economy growing, how do we deal with deficits. And I want
    to thank you all for sharing your wisdom about how to do so.
        One thing is for certain: In all we do, we've got to make sure the
    economy grows. One of the reasons why we have a deficit is because the
    economy stopped growing. And as you can tell from the previous 4 years,
    I strongly believe that the role of Government is to create an
    environment that encourages capital flows and job creation through wise
    fiscal policy. And as a result of the tax relief we passed, the economy
    is growing. And one of the things that I know we need to do is to make
    sure there's certainty in the Tax Code, not only simplification of the
    Tax Code but certainty in the Tax Code. So I'll be talking to Congress
    about--that we need to make sure there is permanency in the tax relief
    we passed so people can plan.
        If the deficit is an issue--which it is--therefore, it's going to
    require some tough choices on the spending side. In other words, the
    strategy is going to be to grow the economy through reasonable tax
    policy but to make sure the deficit is dealt with by being wise about
    how we spend money. That's where Josh comes
    in. He's the--as the Director of the OMB, he gets to help us decide
    where the tough choices will be made. I look forward to working with
    Congress on fiscal restraint, and it's not going to be easy. It turns
    out appropriators take their titles seriously. [Laughter]
        Our job is to work with them, which we will, to bring some fiscal
    restraint--continue to bring fiscal restraint--after all, non-defense
    discretionary spending--non-defense, non-homeland discretionary spending
    has declined from 15 percent in 2001 to less than 1 percent in the
    appropriations bill I just signed, which is good progress. What I'm
    saying is we're going to submit a tough budget, and I look forward to
    working with Congress on the tough budget.
        Secondly, I fully recognize and this administration recognizes
    there--we have a deficit when it comes to entitlement programs, unfunded
    liabilities. And I want to thank the experts and the folks here who
    understand that. The first issue is to explain to Congress and the
    American people the size of the problem--and I suspect Congressman
    Penny will do that as well as Dr. Roper--and the problems in both Social Security and
    Medicare.
        The issues of baby boomers like us retiring, relative to the number
    of payers into the system, should say to Congress and the American
    people, ``We have a problem.'' And the fundamental question that faces
    Government, are we willing to confront the problem now or pass it on to
    future Congresses and future generations. I made a declaration to the
    American people that now is the time to confront Social Security. And so
    I am looking forward to working with Members of both Chambers and both
    parties to confront this issue today before it becomes more acute.
        And by doing so, we will send a message not only to the American
    people that we're here for the right reason, but we'll send a message to
    the financial markets that we recognize we have an issue with both
    short-term deficits and the long-term deficits of unfunded liabilities
    to the entitlement programs.
        And I want to thank the panelists here for helping to create
    awareness, which is the first step toward solving a problem. The first
    step in Washington, if you're interested in helping, is to convince
    people that there is a problem that needs to be addressed. And once we
    have achieved that objective,

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    then there will be an interesting dialog about how to solve the problem.
        I've got some principles that I've laid out. And first, on Social
    Security, it's very important for seniors to understand nothing will
    change. In other words, nobody is going to take away your check. You'll
    receive that which has been promised. Secondly, I do not believe we
    ought to be raising payroll taxes to achieve the objective of a sound
    Social Security system. Thirdly, I believe younger workers ought to be
    able to take some of their own payroll taxes and set them up in a
    personal savings account, which will earn a better rate of return,
    encourage ownership and savings, and provide a new way of, let me just
    say, reforming, modernizing the system to reflect what many workers are
    already experiencing in America, the capacity to manage your own asset
    base that Government cannot take away.
        So with those principles in mind, I'm openminded--[laughter]--with
    the Members of Congress. [Laughter]
        Anyway, thank you all for coming. I'm looking forward to the
    discussion.
        Office of Management and Budget Director Joshua B. Bolten. Mr. President, thank you. Thank you for convening
    us. It warms my budget heart--[laughter]--that you've taken the time to
    come and talk about fiscal responsibility, which is so important,
    especially at this time. We've come through some tough years, Mr.
    President, during your tenure.
        As you entered office, the economy was entering recession. We had
    the attacks of 9/11. We've had the war on terror. We've had corporate
    scandals that undermined confidence in the business community. All of
    those together took a great toll on our economy and especially on our
    budget situation, as you mentioned. And we've started to turn it around.
    The economy is well out of recession. It's growing strongly, as I think
    our panelists will talk about. And as a result of that, we are seeing a
    dramatically improving budget situation.
        We originally projected our 2004 deficit to be about 4.5 percent of
    GDP, and when we got the final numbers just a few weeks ago it was down
    to 3.6 percent of GDP, a dramatic improvement. Now, that's still too
    large, but it's headed in the right direction. You mentioned, Mr.
    President, the 2005 spending bills that you just signed last week. I
    think those have to be regarded as a fiscal success, because you called
    on the Congress almost a year ago to pass those spending bills with
    growth of less than 4 percent overall and especially to keep the non-
    national-security-related portion of that spending below 1 percent, and
    they delivered. And that's the bill that you signed just last week.
    We're working now, Mr. President, as you know, on the 2006 budget. And
    I'm hopeful that we will keep that momentum of spending restraint going.
        What I think we will be able to show, when we present your budget
    about 6 or 7 weeks from now, is that we are ahead of pace to meet your
    goal of cutting the deficit in half over the next 5 years. And I think
    that's very important. And I think our panelists will talk a little bit
    about why that is.
        So let's step back a little bit from the Budget Director's
    preoccupations and talk more broadly about the economy. Our first
    panelist is Jim Glassman, who is senior U.S. economist at J.P. Morgan
    Chase. He's a frequent commentator in the financial press, I think well
    known in the financial community.
        And Jim, let me open it with you and ask you to talk about how the
    budget situation is related to the economy overall, because that's
    really what people care about.
        James Glassman. All right. Thanks,
    Josh. Thanks, President Bush, for inviting us here to participate in
    this discussion. It's a privilege.
        The Federal budget is tied very closely to the fortunes of the
    economy. When the economy is down, revenues are down. When the economy
    comes back, revenues come back. In the last several years, we've

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    seen that link very closely: The economy slowed down; revenues dried up;
    the budget deficit widened. It's happened many times before. And in Wall
    Street, Wall Street understands this link between the economy and the
    budget, and that's why--we anticipate that these circumstances are going
    to be temporary, and that's why long-term interest rates today are at
    the lowest level in our lifetime, even though we have a budget deficit
    that's widened. And in fact, now, with the economy on the mend, the
    revenues are coming back, and the budget deficit appears to us to be
    turning the corner. So I think the prospects are looking quite good for
    the budgets going in the next several years.
        Now, to me, the link between the economy and the budget tells you
    there's an important message here, and that is: Policies that enhance
    our growth potential are just as important for our long-run fiscal
    health as are policies to reform Social Security and health care reform.
    We know how to do this, because over the last several decades we've been
    reforming our economy, deregulating many businesses, breaking down the
    barriers to trade. And it's no surprise that countries all around the
    world are embracing free market principles. Free markets is the formula
    that has built the U.S. economy to be the economic powerhouse that it
    is.
        Now, I realize the last several years have been challenging for a
    lot of folks, and it's hard for folks to step back and appreciate the
    amazing things that are going on in the U.S. economy when they're
    struggling with this, with the current circumstances. But I have to tell
    you, what we are watching around the U.S. economy is quite
    extraordinary, and I would like to highlight two things in particular
    that are important features of what's going on in the U.S. economy,
    because it tells us--that basic message is, it tells us that we're on
    the right paths, and number two, it tells us how we might build on the
    policies that are helping to encourage growth.
        The first important observation: Productivity. Productivity in the
    U.S. economy is growing almost 3 times as fast as the experts
    anticipated several years ago, a decade ago. Now, we know why that's
    happening: Economic reform has strengthened competition; the competition
    has unleashed innovation; that innovation is driving down the cost of
    technology; and businesses are investing in tools that allow us to do
    our jobs more efficiently. Why that's important? Because most of us
    believe that what's driving this productivity is information technology.
        Now, in my mind, when we're at an extraordinary moment like this
    with rapid changes in technology, it opens up a lot of frontiers. Who is
    it that brings that technology and creates growth? Who is it that drives
    the economy? It's small businesses. That's where the dynamic part of the
    economy is. And so policies that focus on making the business
    environment user-friendly for small businesses, like the tax reform, are
    an important element of building on this productivity performance that's
    going on and building on the information technology.
        Second important aspect of what's going on in the U.S. economy--
    everybody knows we faced an incredible number of shocks in the last
    several years. These shocks, which, by the way, destroyed almost half of
    the stock's market value in a short period of time, for a moment, were
    potentially as devastating as the shocks that triggered the Great
    Depression. And yet, the experts tell us the recession we just suffered
    in the last several years was the mildest recession in modern times.
    That tells you something about the resilience of the U.S. economy. It
    tells you that we have a very flexible economy to absorb these kinds of
    shocks. And I personally think that this is the result of a lot of the
    reforms that we've been putting in place in the last several decades. It
    has made us much more resilient.

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        I find this an even more incredible event because when you think
    about it, we had very little help around the world. The U.S. economy was
    carrying most of the load during this time. Japan, the number two
    economy, was trapped by deflation. Many of our new partners in East Asia
    have linked to the U.S. economy, and they're depending on their linkage
    with the U.S. economy to bring--in hopes of a better future. The
    European region has been very slow-growing. They've been consumed by
    their own problems. So, frankly, we've been in a very delicate place in
    the last several years; the U.S. economy was the main engine that was
    driving this. And yet, we had this incredible performance. I think it's
    quite important.
        Now, when you ask economists to think about the future, where we're
    likely to go, it's very natural--the natural tendency is to believe that
    we're going to be slowing down eventually. And we can give you all kinds
    of reasons why this is going to happen, demographics, productivity slows
    down. My guess is we would have told you this story 10 years ago, 20
    years ago, 100 years ago.
        And I think what's quite incredible--I'm, frankly, somewhat
    skeptical of this vision that we all have, because, if you think about
    it, we've been growing 3.5 percent to 4 percent per year since the Civil
    War. If we can match that performance in the next 50 years--and I don't
    see why that's so hard to do, given the kinds of things we are
    discovering about our economy and the kinds of benefits we see from all
    this reform--then I think the fiscal challenge that we see in our mind's
    eye will be a lot less daunting than is commonly understood.
        So, of course, I don't want to say that growth can solve all our
    problems. It won't. There clearly are challenges on the fiscal side, and
    it's important that we strengthen the link between personal effort and
    reward. And that's why it's right this forum should be focusing on
    Social Security reform and health care reform.
        Thank you.
        The President. May I say something?
        Director Bolten. Mr. President.
    [Laughter]
        The President. Thank you. [Laughter] Who says my Cabinet does
    everything I tell them to? [Laughter]
        You know, it's interesting, you talked about the Great Depression,
    and if I might toot our horn a little bit, one of my predecessors raised
    taxes and implemented protectionist policies in the face of an economic
    downturn, and as a result, there was 10 years of depression. We chose a
    different path, given a recession. We cut taxes and worked to open up
    markets. And as you said, the recession was one of the shallowest.
        And the reason I bring that up is that wise fiscal policy is vital
    in order to keep confidence in our markets and economic vitality
    growing. And that's one of the subjects we'll be talking to Congress
    about, which is wise fiscal policy. And that is the direct connection
    between the budget and spending and confidence by people who are willing
    to risk capital and therefore provide monies necessary to grow our job
    base.
        Director Bolten. Mr. President, let's
    talk a little bit about how investors see those issues that you and Jim
    Glassman have just been talking about. Liz Ann Sonders is chief
    investment strategist to Charles Schwab & Company. She's a regular
    contributor to TV and print media on the market issues that investors
    care about.
        And Liz Ann, let me just open it to you and ask you, how do
    investors see those broad macroeconomic issues that Jim was just talking
    about?
        Liz Ann Sonders. Thanks, Josh. Thanks,
    Mr. President. I do spend a lot of time out on the road talking to
    individual investors. And I will say that the deficit issue is probably,
    if not the number one, certainly in the top three questions I get. I
    think there is a terrific amount of misunderstanding, though, about the
    nature of deficits, how you get there, how do you

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    get out of a deficit situation, the cause and effect aspects of it, and
    I'll talk about that in a moment.
        And we know that higher deficits are a burden on future taxpayers,
    but I think what, in particular, the market would like to see is the
    process by which we go about fixing this problem. And I think the
    markets are less concerned about the number itself and don't have some
    grand vision of an immediate surplus but the process by which we solve
    that problem.
        There's a lot of ways to do that. It is all about choice. And
    certainly, there's one theory that the only way to solve it is to raise
    taxes. I don't happen to be in that camp, and I would absolutely agree
    with Jim and certainly with this administration that the policies
    absolutely have to be progrowth.
        And I think the other benefit that we have right now--and Marty
    Feldstein talked about this yesterday--the difference between the Waco
    Summit and this conference today as representing a very strong economy
    right now versus a couple of years ago. And what that allows you to do
    is have this much stronger platform from which you can make a sometimes
    tougher decision. And I think that's a very important set of
    circumstances right now. I would agree with Jim, also, at the bond
    markets' perception of this, the fact that long-term interest rates are
    low, so we have at least have that camp of investors telling you that
    maybe the risks aren't quite high as some of the pessimists might
    suggest.
        Forecasting is also difficult. I know your administration suggested
    that going beyond 5 years is a tough task, and it is. The market,
    however, builds itself on making forecasts for the future and oftentimes
    will develop a consensus about something. And I will say that I think
    the consensus is one maybe of a little bit--maybe not pessimism but not
    a lot of optimism from a budget deficit perspective. So, I think the
    opportunity comes with showing some effort. And you can really turn the
    psychology of the market very, very quickly under a circumstance where
    maybe market participants are actually pleasantly surprised by the turn
    of events.
        Typically, when you look back in history and you look at processes
    by which we've improved a deficit situation, those that have been
    accompanied by better economic growth have typically been those where
    the focus has been on spending restraint, entitlement reform. Those
    times where we have improved the deficit but it's been in conjunction
    with weaker economic growth are typically those periods where tax
    increases have been the process by which we have gotten there.
        And I also think that many investors misunderstand the relationship
    between deficits and interest rates, and there is a theory building now
    that higher deficits automatically mean higher interest rates. Well,
    case in point, it's just the most recent experience, but we can even go
    back to the late nineties--the reason why we went from deficit to
    surplus was because the economy was so strong. Because the economy was
    strong, the Federal Reserve was raising interest rates. The reason why
    we went into deficit was because the economy got weak, which is the
    reason why the Federal Reserve had to lower interest rates. So you have
    to understand, again, the cause and effect here.
        The path of least resistance, of course, is to make everybody happy,
    but something has to give. You've all talked about this, the ``no free
    lunch'' idea. But I'm just a strong believer that entitlement reform and
    long-term priorities take precedence right now over short-term fixes,
    certainly if it required tax increases. And I think that--Mr. President,
    you talked about having political capital--I'll go back to this idea
    that we now have economic capital that allows us to not disregard the
    short-term fixes for the deficit here but really take this opportunity
    for long-term structural reform.
        I'm a big believer in personal accounts, empowering investors. My
    firm, built by

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    ``the Man,'' Chuck Schwab, is all about empowering individual investors.
    And I think these long-term adjustments that need to be made, which is
    really a part of this whole conference, are so important right now. And
    I think that's absolutely what the market wants to see.
        Thanks.
        The President. Good job. You're not suggesting that economic
    forecasts are as reliable as exit polling, are you? [Laughter]
        Ms. Sonders. I'm not going there.
    [Laughter]
        Director Bolten. Mr. President, I'm
    going to move on. [Laughter] I'm glad that Liz Ann raised the
    distinction, as you did in your opening remarks, between our short-term
    picture and our long-term picture. Our short-term picture is, indeed,
    looking a lot better. I think we'll be able to show a very clear path
    toward your goal of cutting the deficit in half over the next 5 years.
    But the long-term picture is very challenging.
        We're very honored to have with us Tim Penny, who is a professor and
    co-director of the Hubert Humphrey Institute of Public Affairs. He's
    also a former Democratic Congressman and an expert on a lot of the long-
    term issues we're talking about.
        And Congressman, let me turn it over to you and ask you to talk a
    little bit about what are these entitlement programs, and why are they
    important for our long-term budget picture.
        Representative Tim Penny. Well, I
    think--thanks, Josh, and Mr. President. I think the first thing to note
    is that the long-term picture is rather bleak, that the status quo is
    unsustainable. And when you talk about the difference between
    discretionary and entitlement spending, that tells the story.
        Discretionary spending, as you referenced earlier, is the part of
    the budget that we control annually. It comes out of the general fund.
    It's education. It's agriculture. It's defense. It's a whole lot of
    stuff that we think about as the Government.
        But the entitlement programs are those that are on automatic pilot.
    They're spelled out in law, and the checks go out year in and year out,
    based on the definitions in law. So if you're a veteran, you're entitled
    to certain health care benefits under this system. If you're a farmer
    and you grow certain crops, you're entitled to subsidies. There are some
    that are means-tested, in terms--we give them to you only if you need
    them, and that's where our welfare programs and much of our Medicaid
    spending comes into play. And then there are the non-means-tested
    entitlement programs, and among those are Medicare for the senior
    citizens and Social Security for senior citizens. So, they're age-based
    programs.
        And those entitlement programs are the biggest chunk of the Federal
    budget. I think it's constructive to look back over history. In 1964,
    all of these entitlement programs plus interest on the debt, which is
    also a payment we can't avoid, consumed about 33 percent of the Federal
    budget. By 1984, shortly after I arrived in Congress, they consumed 57
    percent of the Federal budget, and today, they consume 61 percent of the
    Federal budget.
        Now, let's look forward a few decades and see where we're going to
    be with entitlement spending. By the year 2040, just three--well,
    actually four of these sort of mandatory programs are going to eat up
    every dime, income taxes, payroll taxes, all other revenues that we
    collect for the Federal Government. Medicaid, Medicare, Social Security,
    and interest on the debt will eat up everything. There won't be a dollar
    left in the budget for anything else by the year 2040. That tells you
    the long-term picture, and it is bleak. So something has to give. Doing
    nothing is not an option.
        Let's look at Social Security alone. And this is something that my
    colleague, Mr. Parsons, will speak to in a few minutes. There are huge
    unfunded liabilities here.

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    We haven't honestly saved the current Social Security trust fund. Even
    though extra payroll tax dollars are coming in each year, they're not
    honestly being set aside for this program. Just by the year 2040,
    there's about $5 trillion of unfunded liability in that program. Now,
    we've got to come up with the money somehow to replace those promised
    dollars, and it's no easy task. And I know that a million, a billion, a
    trillion sort of gets lost on the average listener, so I always like to
    explain that if you're looking at a trillion dollars, just imagine
    spending a dollar every second, and it would take you 32,000 years to
    spend a trillion dollars. So even in Washington, that's big money.
    [Laughter] Or as we say in farm country, it's not chicken feed.
    [Laughter]
        So the other way you can look at this is, your Social Security
    statement comes in the mail every year, and it gives you some sense of
    your promised benefits in the Social Security system. But on page two of
    this statement, there's an interesting asterisk. And the asterisk says,
    ``By about the year 2040, we're not going to be able to pay you all of
    the benefits that we're promising you. We're going to be about 25
    percent short of what we need to pay those benefits.'' So, what does
    that mean we would have to do if we wait until the last minute to fix
    this program? We'd either have to cut benefits dramatically, or we'd
    have to impose the equivalent of a 50 percent payroll tax increase on
    workers to get the money into the system to honor the promised benefits.
        So huge benefits cuts or a huge tax increase--I don't think that's
    where we want to go, especially since 80 percent of Americans now pay
    more in payroll taxes than income taxes. I don't think that's a solution
    that they're going to applaud. But frankly, it is the kind of solution
    we're left with if we wait too long to fix the mess. We waited too long
    20 years ago. When I first arrived in Congress in 1983, we had a Social
    Security shortfall. We were borrowing money out of the Medicare fund to
    pay monthly Social Security checks. So what did we do, because we were
    already in a crisis? We cut benefits by delaying cost-of-living
    adjustments. We cut benefits by raising the retirement age, first to 67
    and--66 and ultimately to 67, and we increased payroll taxes
    significantly during the 1980s. And so we basically said to future
    workers, based on that legislation in 1983, ``You're going to pay more
    and get less.''
        I mean, to me, that's the problem with waiting until the last minute
    to fix this, is that you give people a worse deal. So my view on this is
    that, for the long term, we can't wait until the crisis hits to address
    the issue. We have to look at these challenges now and give the next
    generation a better deal. And if we plan ahead and plan appropriately,
    we can do that.
        So we need to act before it's too late. And then I think we send all
    the right signals, and we do a better deal for younger workers than sort
    of the same old, ``cut benefits, raise taxes,'' a solution that's been
    imposed in the past.
        The President. I appreciate that. I think the issue has shifted. I
    think there are more people now who believe they'll never see a check
    than people who are worried that they'll have their check taken away.
    And I think it's important for Congress to understand that. And my
    attitude is exactly like Congressman's, and
    that is is that now is the time to deal with it. And it's going to be
    very important that we reassure our seniors who depend upon Social
    Security that nothing will change as--and that's been part of the
    political problem. And any time anybody mentioned the word Social
    Security, the next thing that followed was, ``Yes, he's saying that
    because he's going to take away your check.'' And really what we're
    talking about is the new generation. I appreciate you pointing that out,
    Tim.
        Representative Penny. If I can just add
    this one point, if we had saved these surpluses honestly, in personal
    accounts over the last 20 years, we'd be well on the way

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    to fixing this problem by now. And so we may be a little late in getting
    this done, but it's still important to move in that direction.
        The President. Thank you.
        Director Bolten. Somebody who's been
    directly involved in and a leader in trying to formulate a solution for
    the Social Security problem is Dick Parsons, who is CEO and chairman of
    Time Warner. And he was Chairman of the President's Commission on Social
    Security, cochair with the late Senator Patrick Moynihan, whom I know we
    all miss at this time.
        Mr. Parsons, we're grateful that you're here, and I wonder if you
    would follow on Congressman Penny's remarks and talk a little more
    specifically about your Commission's work, what problems you saw, what
    solutions you saw.
        Richard D. Parsons. Thank you, Josh,
    Mr. President. The President said earlier that we have to recognize that
    we have a problem with Social Security. I think everybody does. And I
    don't know that they share the urgency that Tim just spoke to and the
    President just spoke to or really understand the nature of the problem.
    So, let me take a step back and talk about--approach it from a slightly
    different angle, talk about what is the problem with the Social Security
    system, which was created in 1935 as what they call a pay-as-you-go
    system.
        Now, most people here know that, but it was amazing to me, when we
    had our Social Security Commission, we went all around the country, we
    had a number of public hearings, and the people would come and say,
    ``Well, what are they doing with my money?'' Well, what most people
    didn't know is they were taking your money that you pay in every day or
    every week when you get a paycheck, and within a very short period of
    time it's going out the other door to pay benefits, pay-as-you-go: Money
    comes in; it goes out to pay the benefits.
        Now, that system was created at a time when for every person who is
    eligible to participate--retirees, let's call them--there were 40 people
    in the workforce. There were 40 people working to support one. It was
    also created at a time when the average life expectancy for males was
    such that the average man would not live to see the day that he could
    qualify for Social Security. So, you would pay in, and the system was
    built in part--this is not cynical; it's just fact--on the notion that
    half the people who paid in would never get anything out because they
    would be dead.
        So, where are we today? Today, there are three people in the
    workforce for everybody who's eligible for Social Security. Today life
    expectancy is expanded anywhere from 5 to 7 years, depending on gender,
    since the time the system was created, so that the great majority of the
    people who participate will live to see benefits. The fastest growing
    part of our population is 85 and up. So, we have a totally different set
    of circumstances that we're dealing with. And it's only going to get
    worse in the sense of--or more distant from the way--the situation that
    existed when the system was created. By the year 2020, you'll have two
    people in the workforce for every person eligible to receive benefits.
    And life expectancies will be even greater then.
        So the whole factual basis that underlies this pay-as-you-go system
    has changed. And what's happened is--Tim mentioned that we have huge
    underfunded shortfalls in the system. If you--they usually do this on an
    actuarial basis out 75 years. If you look out 75 years and say, ``How
    much does the system promise it will pay,'' and you look out 75 years
    and say, ``Under the existing tax scheme, how much money are we going to
    be able to have to pay it,'' in current dollars, in actual dollars, it's
    about an $11 trillion to $12 trillion shortfall over 75 years. If you
    roll that back into the current dollars and you say, ``What would it
    take today to close that,'' it's about $4 trillion. So that's the
    problem.

    [[Page 3101]]

        The problem is, we've promised more than the revenues that we have
    or that we can look to, to pay. So what's the solution? The traditional
    solutions are, as Tim just indicated, either we increase the taxes so
    you get more revenues in or you decrease the benefits so you get less
    money out. The problem with that is it's a Band-Aid. And given these
    demographic shifts that we're talking about and that we see, it simply
    can't last. You might be able to put one more Bandaid on the wound and
    patch us over for another 5 or 6 years.
        But for example, some people say, ``Why don't you just lift the wage
    cap?'' Only the first $90,000, as of the beginning of the year, is
    subject to Social Security taxes. Well, even if you eliminated the wage
    cap, that only buys you 4, 5, 6 more years, and then you're back in the
    same problem. We have to face up to the fact that the country is in a
    different place than it was when this system was created. And the fix
    needs to be structural. It needs to be fundamental. We need to change
    the architecture of Social Security.
        And what I mean by that is we gradually have to move from a system
    that is based on a pay-as-you-go basis when you had 40 people in the
    workforce for every one not, to a system that is on a fund-as-you-go
    basis, where people can begin to start to fund and put away the money
    that they will look to in their later years for their support and
    sustenance.
        Now, this is not unprecedented. This is exactly what's happened in
    the business world. Every corporation in America, mine included, has
    been engaged over the last 20, 25 years in a migration from pay-as-you-
    go kind of pension arrangements to funded arrangements. Now, nobody has
    gotten there--very few have gotten there--probably Charles Schwab has
    gotten there, in terms of fully funded arrangements right now--but
    putting the money away now to pay liabilities in the future. This is
    what private accounts is all about. And that's why the Commission came
    down recommending, in all of the options that we put forward, private
    accounts. It's the beginning of shifting from complete pay-as-you-go to
    starting to fund some of our future liabilities now.
        And that's--at the end of the day, while the Government is, in law
    and in sort of a forced social reality, a different entity than the
    business community, economically, it's not. Economically, it's going to
    have to step up to the same reality that business had to step up to,
    that we can't continue a system that puts a huge burden on future
    generations that they're not going to be able to meet. We're going to
    have to start saving and funding our responsibility to ourselves on a
    current basis.
        And that's why we made private accounts as a beginning step--this is
    not privatization of Social Security. What it really is, is--and again,
    this isn't unprecedented; this is what business has done--it's beginning
    to have a hybrid system where you have a floor, a base, below which no
    one can go that is funded on what they call a ``defined benefit''
    basis--that you will get this money, this minimum amount of money, no
    matter what. But then you have an ability above that to enhance that on
    a defined contribution basis--i.e., you put money away now, invest it
    wisely, and it will come back to you and give you an even better
    standard of living in a future time.
        So that's essentially the nature of the problem and why we thought
    that it was time for structural, architectural change to Social
    Security, not just tinkering. You can't--you know, tinkering can't work
    anymore. The demographics--this was Pat Moynihan's point. He would say,
    ``Demography is your destiny. We just can't do what we've done in the
    past any longer. We've got to do something different.'' And this was an
    idea that made sense.
        Director Bolten. Mr. President, you
    mentioned that for current seniors, this is not a debate for them, that
    those at or near retirement, this discussion that's going on now should
    not affect what they've been

    [[Page 3102]]

    promised and what they can expect to get. It's the next generations that
    this is debate--that this debate is about and who should be concerned
    about it. You mentioned, Mr. President, that a lot of the next
    generation doesn't think that there will be benefits there for them.
        Sandi Jaques is somebody, obviously, from that younger generation.
    She's a single mom from West Des Moines, Iowa, and she's active in a
    group called Women for Social Security Choice. And Sandi, let me ask you
    to speak for the--speak for regular folks and younger regular folks--
    [laughter]--and tell us why you got involved in this organization, why
    are you active on Social Security issues.
        Sandra Jaques. Sure, Josh. Well, I think
    the President stated it the best when he said most people in my
    generation believe that we're more likely to never get a benefit than to
    have our check taken away from us. I guess it would be nice to get to
    the point where we had a check, and then we're worried about it being
    taken away.
        So I guess I'm here because I want to make sure that we do get to
    the point where my generation retires and we do have Social Security
    around and intact for us. But more importantly, as you mentioned, I have
    a daughter at home. Her name is Wynter. She's 10 years old, and I want
    to make sure that she has Social Security when she retires as well.
        And I believe that the only way to really get to that point is with
    personal retirement accounts. They're really the only way to update or
    modernize Social Security in a real way without tinkering it, as Mr.
    Parsons talked about and as Congressman Penny did when they were in
    Congress, because then you only resort to a tax increase or benefit
    cuts. With personal retirement accounts, you have money in an account,
    and that money is allowed to grow, and it's that growth that actually
    will help to fix Social Security for future generations.
        Without that, if we wait, we will have to resort to raising payroll
    taxes or cutting benefits like they did in the eighties. To speak to
    raising payroll taxes on a personal level, I can't afford a payroll tax
    increase. In fact, I think I definitely pay more than enough right now,
    and that's another reason why I support Social Security reform. I am not
    one of these young people that is willing to give up on that money I'm
    already paying into the system. I want to see the system fixed so that I
    can get that money back when I retire.
        And as Tim mentioned, by 2040--I actually retire in 2044 unless the
    retirement age is raised again--but in 2044, we're already at the point
    if we do nothing, I will get 25 percent less than what I should get
    under the current system right now. So, that is why this issue is very,
    very important to me.
        But I also want to talk about current seniors right now. My grandma
    is already retired. My dad actually plans to retire next year and my mom
    a couple years after that. It's very important to me to make sure that
    their benefits remain intact for them. They--it's too late for them to
    invest in a personal retirement account. But because of that we need to
    make sure that we guarantee their benefits through their retirement,
    because it's something that they've been relying on. And it's, I think,
    our duty to make sure that we make sure that happens.
        But at the same time, I also think it's the country's duty to make
    sure that we fix Social Security now so that it's around for when future
    generations retire because personal accounts are really the only way to
    give us retirement security in the future for me and, more importantly,
    my daughter. Because if I am faced with a 25 percent benefit cut when I
    retire, they may be looking at raising payroll taxes on my daughter and
    younger generations at that time. So really, that's why this is very
    important to me, Josh.

    [[Page 3103]]

        The President. You know, one of the interesting visions of personal
    savings accounts is that Sandi will be able to
    pass her account on to Wynter as part of Wynter's capacity to retire as
    well. It is a novel concept, clearly different from the current system
    where you don't pass anything on.
        Ms. Jaques. That's a great point. That's
    also very important to me because if you do get to the point where
    you're raising payroll taxes or cutting benefits to make Social Security
    solvent at that time, you still don't own your benefits. With a personal
    account, you own the money that's in that account. And I'm sure Wynter
    will be hoping that I have a very modest retirement so that there is
    some left for her--[laughter]--when I die. But that's a very important
    aspect as well.
        The President. One of the things on personal accounts that listeners
    must understand is that you cannot take--if a personal account, in fact,
    exists, you can't take it to the racetrack and hope to really increase
    the returns. [Laughter] It's not there for the lottery.
        In other words, there will be reasonable guidelines that already
    exist in other thrift programs that will enable people to have choice
    about where they invest their own money, but they're not going to be
    able to do it in a frivolous fashion, which will mean two things. One,
    it's more likely there will be a rate of return higher than that which
    is in the Social Security trust and, secondly, more likely to be actual
    money available when you retire.
        Director Bolten. Mr. President, we've
    been focused on--principally so far on the retirement security of
    today's and future seniors. It's also very important that seniors have
    some security about their health care situation. And so we're privileged
    to have with us Dr. Bill Roper, who is dean of the School of Medicine at
    the University of North Carolina in Chapel Hill. And he's also head of
    the UNC health care system. Dr. Roper also served in a previous Bush
    administration as--among other things, as the head of the Medicare
    system. So he knows a lot about this stuff. And let me just ask Dr.
    Roper to bring us out of the retirement system and into the health care
    system and tell us what are the challenges we face there and what do
    they mean for our budget situation.
        William Roper. Thanks, Josh. And thank
    you, Mr. President. I think that is my role on this panel, is to say:
    Remember health care; remember Medicare. Surely, the focus on Social
    Security is important, but there's this other large and, indeed, faster
    growing entitlement program called Medicare. Just a few numbers to make
    the point: This year, the Medicare program is one-eighth of the entire
    Federal budget. Ten years from now, that's projected to be one-fifth of
    the Federal budget. And by 20 years from now, Medicare will be larger
    than Social Security, so it will be the largest Federal entitlement
    under current growth rates.
        Another point: This year, 2004, the trust fund that our payroll
    taxes go into that pays for hospital and related benefits in Medicare--
    more money is going out of that trust fund to pay for current needs
    right now for seniors and others in the Medicare program than payroll
    taxes are going into it. So the balance in the trust fund is beginning
    to go down, and it's projected to be entirely exhausted, under current
    spending patterns, by the year 2019.
        All of that is driven by changing demographics. We're aging as a
    society, and we have a more expensive health care system. Now, a lot of
    times we in the health policy community beat up on ourselves, saying
    that's a terrible thing that we're devoting so much to health care. I
    think it's important to point out that health care is something that we
    value tremendously as a society. The ability to spend so much on health
    care is part of our being a very healthy economy and a society that says
    we want to invest in our health, especially the health of seniors.

    [[Page 3104]]

        And many good things result from health care. A very careful study a
    few years ago by some economists showed that if you look carefully and
    count the costs and count the benefits, that technology--technological
    advances in health care are worth the cost. The benefits far outweigh
    the costs. And so we ought to continue to feel good about that,
    especially those investments in prevention that end up paying rich
    dividends down the line.
        Projections about how much we're going to spend in Medicare is more
    difficult than the projections for Social Security. Everybody who is
    going to be a senior citizen 50 years from now has already been born, so
    we know how to project Social Security numbers. But we don't know what
    medical advances are going to occur, what new technologies, new
    treatments, new drugs, whatever, are going to be there. We don't know
    how much they're going to cost. Some will surely save money; some will
    cost more. The benefits there are substantial. But the simple point is,
    the growth rate for Medicare is unsustainable. We just can't devote the
    entire Federal budget to health care.
        So the question becomes, how do we constrain that growth? What do we
    do about it? And broadly speaking, we face two options. One is to do
    what Medicare has done over the last several decades. And I was there in
    the eighties and the nineties, and we put in place what are called
    administered price systems, which is the Government deciding how much to
    pay hospitals and how much to pay doctors and running those systems so
    that we try to restrain the rate of growth to the extent possible.
        The alternative, which many people, myself included, and you, sir,
    are advocating is a much greater reliance on individuals and empowering
    them to make choices, helping them see the value of investing in
    preventive behavior, better health for themselves long-term, providing
    information on who are the quality health care providers so that people
    can make choices about where to go for themselves, and moving us towards
    a time when we will see head-to-head competition between alternatives to
    Medicare and the traditional Medicare program. The Medicare
    Modernization Act of last year took us important steps in that
    direction. But we have much more to do.
        In general, we need to see that the philosophy of private accounts
    applies to Medicare, just as we've been talking about Social Security.
    So we need to move towards more choices for individuals, more
    competition in market forces and health care, and more organized,
    integrated care, especially for people with chronic illnesses, because
    they're the ones who end up costing so much. If we can intervene early
    with preventive techniques, as I said, we can lower that rate of growth
    in spending and end up with a program that we value just as much as the
    one that we value today, but doesn't cost as much.
        The President. Thanks for mentioning the Medicare bill. One of the
    reasons I was strongly for it was because it did begin to interject a
    sense of choice for seniors into the marketplace. And secondly, it
    recognized that medicine has changed. And when you have a kind of a
    static system where Government makes the decisions, it's hard sometimes
    to get bureaucracies to adjust to the reality. And the reason why I
    believe the prescription drug benefit was a vital component of a new and
    modern Medicare system was so that we could prevent hospital stays, for
    example, by the judicious use of prescription drugs. And Medicare--I've
    said this a hundred times around the country--Medicare would pay for
    hospitalization for a heart attack but wouldn't pay for the prescription
    drugs the could prevent the heart attack from occurring in the first
    place, which didn't seem like a very cost-effective way to try to
    provide good health care.
        And the reforms in the modernization program that we've got there
    has begun, I think, to address the inadequacies of Medicare as a result
    of decisions being

    [[Page 3105]]

    made at the Federal level. But you're right, we've got more to do.
        Dr. Roper. A lot more to do, but it's a
    step in the right direction.
        The President. Thank you.
        Director Bolten. Mr. President, I want
    to bring our economists back in now, because we've heard about some
    daunting challenges in the Social Security system, in the health care
    system--and let me ask Liz Ann first, what are markets and investors
    looking to the Federal Government to do at this point?
        Ms. Sonders. Let me stay on Social
    Security reform for a minute. NBC/Wall Street Journal just had an
    interesting poll out this morning that was reported showing about 50
    percent of the surveyed population was not for private accounts. What I
    found more interesting was a little bit later in the report, there were
    more questions asked than just that, and there was another more general
    question asked about, if these same folks had the opportunity to put
    more money in the stock market, would they? And 80 percent said yes.
        So I think this goes back to this idea of a lot of misunderstanding,
    I think. One of the problems that we're dealing with now is because many
    in the Wall Street community very much believe in private accounts,
    there's this natural assumption that it must only be because Wall Street
    is going to be a huge beneficiary of these private accounts. And
    certainly what I think makes the most sense and the person for whom I
    work, Chuck Schwab, thinks makes most sense, is that you are very
    controlled. As you said, Mr. President, a thrift savings plan kind of
    program where your options are very limited; it's very index in nature.
    The fees are structured to be so minimal that in fact even the studies
    have shown that under any set of proposals Wall Street probably doesn't
    make any money on this for another 7 or 8 years. So I think there is
    this natural assumption that if Wall Street is for it, it must mean that
    they are going to be big financial beneficiaries of it.
        I just think, again, it goes back to what I know you're a big
    supporter of, which is the democratization of the markets for
    individuals, putting more control in people's hands. And I think this,
    much like 401(k)s did as we moved from a benefit part of the non-Social
    Security retirement to more of a contribution style--it's really been
    one of the reasons why net worth has gone up. And I think Sandy made
    some wonderful points about the power that that puts in your own hands.
    And the fact that you can actually pass it on to future generations
    makes all the sense in the world to me.
        Director Bolten. Liz Ann has focused on
    those personal accounts in particular. Let me ask Dick Parsons to say a
    little more in detail about what your Commission concluded about
    personal accounts and what's the right way to do this kind of thing.
        Mr. Parsons. Fair enough. The point I
    was making earlier is that we've got to migrate from an unfunded plan,
    right, that assumes there are always going to be enough people in the
    workforce to take care of those who are not, to a funded plan where
    folks who are out of the workforce have had a chance, over the course of
    their working lives, to take care of themselves.
        Now, that can be done one of two ways. The Government could do it.
    In other words, the Government could hang on to the money and actually
    save it instead of spend it, or you could give people the power to do it
    on their own behalf. And after--we went around the country, we talked to
    literally scores of people representing scores and scores and scores
    more. And clearly, I think, the sense of our fellow Americans and our
    sense as a Commission was, the better of those two choices is to begin
    to let people fund their own programs so that they, A, had a sense of
    ownership, of wealth creation. The object ought to be, at the end of the
    day, to put everybody in America in a place where, while the Government
    is the place of last resort when everything goes wrong,

    [[Page 3106]]

    there are fewer and fewer of them because more and more of us can take
    care of ourselves, right? So that's the objective; that's the direction
    the Commission felt that this migration to a funded world should go.
        Now, there are lots of examples of how you can do that. Sure, the
    President just said you don't want to say to everybody, ``Well you
    just--you can hang on to 2 or 3 percent of your money and just put it in
    your pocket, do what you want with it.'' There's some people who would
    go to the track. People aren't ready for that just yet. But there are
    lots of examples of ways in which this can be done cost effectively. The
    Federal Thrift Savings Plan which the President referred to and which
    Liz Ann just talked about is a great example. That is a program that
    exists for people who work for the Federal Government now, who have this
    right. And it's been run for a number of years. Its results are
    superior, particularly compared to the returns you would get leaving
    that money with the Government. And the beneficiaries of that are the
    people who participate in that plan.
        So we think that there ought to be, at least initially, limitations
    on how much discretion you have in terms of investing the funds and
    creating some kind of trust arrangement where there are people who are
    investment professionals who help structure and manage the costs of the
    initial options. But clearly, people ought to be able to start to save
    on their own behalf to create wealth for themselves so that they have
    that wealth to look to in their later years, as opposed to a Government
    promise only, which at some point in time is going to have to come up
    empty because you won't have a big enough revenue base to draw from to
    satisfy the problems.
        Director Bolten. Congressman Penny,
    the--one of the critiques I've heard about taking some of the steps that
    Dick Parsons is talking about is that, look, this isn't a problem for
    decades to come. It may be a problem by the time Sandi retires but
    certainly not a problem now. Why do we have to wrestle with this tough
    political issue now? How do you answer that?
        Representative Penny. You can pay me
    now or pay me later. Wasn't there a commercial on TV once where--and the
    purpose of the commercial was to say that you can spend a little bit now
    and fix this thing permanently, or you can just pay me forever. It's
    sort of like a credit card where you can pay it off now and be done with
    it, or you can pay the minimum payment forever. And that's sort of the
    choice we're facing here.
        And if we choose not to address Social Security reform now and we
    let this thing drag along until we do get to a point of crisis, then
    we're going to be cutting and pasting and cutting and pasting, year
    after year after year, well into the future. It's going to unsettle the
    markets, because they're going to look at a fiscal house that is not in
    order. So that's the reason it's important to address this now.
        I gave an example during my initial remarks about what did happen
    when we waited until the crisis was already upon us. We've now got a
    window of opportunity to address this issue, and I think we ought to
    take it.
        And I do want to just add one point about polling data, because
    depending upon how you word the question, you get widely disparate
    responses. But I've seen polling data that indicates that for younger
    people like Sandi, support for Social Security reform that includes
    personal accounts is about 80 percent.
        The President. That's right.
        Representative Penny. So it's huge. And
    frankly, the support for personal accounts as part of the solution--and
    it has to be part of a package. And that's what we tried to address in
    the Commissions: How do you put this all together in order to make it
    work for the long term, in order to pre-fund as much of this as we can
    while retaining a basic safety net under the traditional system. It has
    got to be a package.

    [[Page 3107]]

    But when you talk about reform that includes personal accounts, it's
    strongly favored by everyone that currently is ineligible to join the
    AARP. [Laughter]
        And it seems to me this is really who we're talking about, because,
    as you've said, we're not talking about any changes in the near term.
    People who are eligible to join the AARP today are going to be protected
    under the traditional system. But we ought to, on a voluntary basis,
    give people working today the option of pre-funding part of their
    retirement and then owning that retirement in a way that the Government
    can't take it away from them.
        Director Bolten. Tim, the other thing
    I've heard--and I'm going to ask Jim Glassman to come in here--the other
    thing I've heard is, ``Well, maybe you do have to deal with the problem
    now because it just gets harder to deal with it later. But we can deal
    with this Social Security problem, and in fact, we can deal with most of
    our fiscal problems by raising taxes.'' How do you react to that as an
    economist? And how do you think markets would react to that kind of
    solution?
        Mr. Glassman. Well, I think markets
    would worry about that. Because markets would worry about what does that
    do to growth incentives and investment incentives and savings
    incentives? And I think, in the markets, we're interested in--we know
    it's a structural problem and we know that if you come up with
    structural changes and structural reforms, we're going to be much more
    impressed by that, because we don't need promises to cut this and that.
    What we need is to see that the reform that's taking place will be
    changing behavior and will be bringing market discipline into the
    process. And I think people would be pretty disappointed if the only
    solution you could think of was raising taxes.
        The President. Why do markets matter to the person out there looking
    for work?
        Mr. Glassman. You know, the markets
    are a barometer of this--this is where we, collectively, think about the
    future. And the markets are a taste test of what people, collectively,
    think is going to be happening in the future. So it's--for one thing,
    it's a barometer of what we think of your policies. And for another
    thing, it affects us when we go to take out a mortgage loan. Interest
    rates go up, because we don't like what's happening, or we're worried
    about a policy that's not going to be fixing the problem, then we
    homeowners pay a price.
        Director Bolten. Sandi, what--there has
    been talk about personal accounts here, and you've been around Iowa, I
    guess, campaigning for them. Tell me a little more specifically what it
    is that attracts you about them, what you would do with it, and whether
    you have any concerns about the safety of that, of making an investment
    in a personal account rather than letting the Government keep your
    money.
        Ms. Jaques. Well, Tim already mentioned
    earlier, by the time I retire I should expect a 25 percent reduction in
    what I should expect to get. So I have a hard time thinking that I could
    do worse in a personal account than I could with the current system. So
    I guess I'm not worried at all about the security of my investments in a
    personal account. Because, as others have mentioned, the choices would
    be limited. I'm not going to be able to invest the money at the
    racetrack or invest it--you know, open up the paper and pick one stock
    and cross my fingers and hope that it does well. I will be given limited
    options for how to invest that in very diversified funds. So I'm not
    worried one bit that I would do better in a personal account than I
    would do under the current Social Security program because of the
    demographic changes that will take place before I retire.
        But on a more broader sense, why personal accounts are important to
    me--it's very important to me because I think they're the only way to
    give me security in my retirement and my daughter's retirement without
    raising payroll taxes. I can look at paying the same percentage in
    payroll taxes until I retire but have a bigger

    [[Page 3108]]

    account when I retire, because of the growth that will take place over
    the next 40 years that I work. I have 40 more years to work before I
    retire.
        And if you raise payroll taxes, you're just going to be asking me to
    pay more but give me less when I retire. But with a personal account, I
    can pay the same amount in payroll taxes and use a portion of that to go
    to--into my personal account, so I can pay the same and get back more.
    Now, paying the same and getting back more when I retire--I don't know
    why anyone else is considering any other option than that because I
    can't think of a better deal than that.
        Director Bolten. Dick Parsons.
        Mr. Parsons. Yes, just--the other
    thing that I think people need to consider when Tim talks about a window
    of time to operate is, the statistics we saw in the Commission say by
    about the year 2020, you're going to have about two people working for
    every person retired. But that's still two to one. And where I come
    from, that's a majority. And you've got to ask yourself, are those two
    going to let the Congress tax them sort of into oblivion to pay for the
    one that's not in the workforce. I don't think so.
        I think the limit--there is a limit to how much you can tax, which
    means that either benefits will have to come down--that's inevitable,
    and people who have been promised something and who believe that they're
    entitled to something and who've planned on getting it aren't going to
    get it--or essentially, you sort of monetize it that you just issue more
    money to pay those promises. But by doing that, a dollar buys 50 cents
    of what it used to buy, so that we're on a collision or a train wreck
    course. And Tim is 100 percent right when he says that the time to start
    to deal with that--you can't fix this problem with no pain, without
    making some sacrifices. But the time to start making those sacrifices is
    now, so that they're manageable, so that the markets can have confidence
    that we're on a course that is going to avoid the train wreck. Because
    if we wait until later, it will be a huge train wreck for our whole
    economy.
        Director Bolten. Mr. President, we're
    reaching the end of our time, and I'm going to do the smart thing and
    give you the last word. [Laughter]
        The President. Thank you, Ambassador.
    [Laughter]
        I love the idea of people being able to own something. You know, one
    of the most hopeful statistics in America is the fact that more and more
    people are owning their own home. It is a--it's just--I met a lot of
    people on the campaign trail that said, ``I just bought my first home.''
    And there's just such joy in their voice, that they were able to say,
    ``This is my home.''
        I love the fact that more and more people are starting their own
    business. I think one of the unique things about America is that the
    entrepreneurial spirit is so strong that people are willing to take
    risks. People from all walks of life, all income levels are willing to
    take risks to start their own company. And it's a fantastic experience
    to meet people who say, ``My business is doing well. I'm trying to do
    the best I can with my business.''
        And I like the idea of people being able to say, ``I'm in charge of
    my own health care.'' In other words, ``If I make a wise decision about
    how I live, I end up with more money in my pocket when it comes to a
    health care savings account.'' I particularly like the idea of a Social
    Security system that recognizes the importance and value of ownership.
    People who own something have a stake in the future of their country,
    and they have a vital interest in the policies of their Government.
        And so I want to thank the panelists who are here for helping to
    illuminate the need to fix problems but, at the same time, recognizing
    the inherent optimism about promoting an ownership society in America.
    And I want to appreciate you helping advance this issue--these issues,
    so that when we begin the session after the new year,

    [[Page 3109]]

    these will be foremost and forefront issues for the Congress to
    consider. Now is the time to solve problems and not pass them on. This
    is my message today. It'll be my message to Members of the United States
    Congress. We have come to Washington to serve, to solve problems and do
    the hard work so that when it's all said and done, they'll look back and
    say, well done, you did your job.
        Thank you all for coming.

    Note: The discussion began at 9:32 a.m. at the Ronald Reagan Building
    and International Trade Center. In her remarks, Ms. Sonders referred to
    Martin Feldstein, professor, Harvard University.